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Problems with Background Screening in the Workplace

As we’ve discussed in previous articles, employee background checks are required in a number of industries to ensure public safety and security. Background checks are being conducted more frequently than ever before. Indeed, according to a 2012 study conducted by the National Consumer Law Center, about 73 percent of employers conduct criminal background checks for all potential applicants. However, evidence indicates that professional background screening companies routinely make mistakes, often with serious consequences for job seekers.

The Industry

Companies providing a background check service are part of a growing industry. The industry is made up of large national corporations, as well as numerous smaller local and regional companies providing criminal record information to employers. According to a BusinessWeek article:

“Background screening has become a highly profitable corner of the HR world. At the screening division of First Advantage (FADV), based in Poway, Calif., profits soared 47% last year, to $29 million; revenue grew 20%, to $233 million. HireRight (HIRE), based in Irvine, Calif., reported that earnings jumped 44%, to $9 million, last year on revenues of $69 million. To grab a piece of this growing market, Reed Elsevier Group (RUK), the Anglo-Dutch information provider, agreed to acquire ChoicePoint for $4.1 billion in February – at a 50% premium to its stock price.”

There are currently no licensing requirements to become a background checking agency and no system for registration exists. Essentially, anyone with a computer, internet connection and access to records can start a background screening business.

Accuracy is an Issue

Attorneys and community organizations that work with consumers with problematic background reports say that they often see background reports that:

  • Mismatch the subject of the report with another person
  • Reveal sealed or expunged information
  • Omit information about how the case was disposed or resolved
  • Contain misleading information
  • Mischaracterize the seriousness of the offense report

Mismatched reports are an extremely common problem with criminal background reports. These contain the criminal history of a person other than the subject of the report, and are mainly the result of unsophisticated matching criteria. Biometric identification systems help to reduce the chances of incorrectly connecting someone to the criminal record of another. Private background check companies typically match information in their databases using non-biometric information (e.g. name and birth date).

Another problem within the screening industry involves the common practice of subcontracting out the search for criminal records. However, the subcontracting does not stop with one vendor, but continues as the vendors themselves subcontract the work to other vendors. This practice of sub-sub-sub-contracting drastically reduces accountability and increases the likelihood of erroneous information. The majority of background check agencies do not demand stringent quality controls over the information provided by vendors.

One of the most damaging mistakes an agency can make is to reveal sealed or expunged data. The information revealed in such records is nearly impossible to dispute with the employer. If the agency has mixed the job applicant’s file with another person, the applicant can argue it was not him/her. In the case of a sealed conviction, the applicant cannot claim that the accusation is false, but merely that the employer should not know about it.

Background check companies might also omit final disposition data. This means that the companies would report the fact that charges were filed, but not whether the person was convicted. Because of this omission, people who have been exonerated of the charges against, or had the charges dropped or reduced, appear to have pending criminal complaints against them.

Certain screening agencies will dedicate considerable space on their reports to tout the jurisdictions they search, but will leave significantly less space to the results of those searches. Even more worrisome is that background screening agencies have been known to report single arrests or incidents multiple times. Screening agencies will also attempt to subvert the time limits for information in the FCRA by telling potential employers that the company has information that it could not share.

Advocates across the US report that they often see mistakes on commercial background reports, due to a fundamental misunderstanding of how states report and classify information. In particular, commercial background screening agencies repeatedly misreport the level or classification of the offense. Additionally they rarely know what to do with offenses that are classified as less than a misdemeanor or are non-criminal offenses (e.g. traffic tickets).

Recommendations

The National Consumer Law Center recommends the Consumer Financial Protection Bureau (CFPB) use its rulemaking authority under the Fair Credit Reporting Act (FCRA) to:

  • Require mandatory measures to ensure greater accuracy.
  • Define how long an employer has to wait in between sending an initial notice and taking an adverse action (i.e. rejecting an applicant or terminating an employee).
  • Require registration of consumer reporting agencies.

The Federal Trade Commission (FTC) could also enforce the FCRA in the following ways:

  • Investigate major commercial background screening companies for common FCRA violations.
  • Investigate major, nationwide employers for compliance with FCRA requirements imposed on users of consumer reports for employment purposes.

Summary

Companies providing a background check service are part of a quickly growing industry, however, errors in reporting can have serious and long-lasting consequences on job seekers. Attorneys and community organizations that work with consumers with problematic background reports say that agencies often produce reports that contain inaccurate information. This article takes a look at some of the most common problems within the background screening industry.

CIPP Exam Preparation

In preparation for the Certified Information Privacy Professional/United States (CIPP/US) exam,  a privacy professional should be comfortable with topics related to this post, including:

  • Employee background screening (IV.B.a.)
  • Screening requirements under FCRA (IV.B.a.i.)
  • Screening methods (IV.B.a.ii.1. – IV.B.a.ii.4.)
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